Progressive Corp.’s (PGR) second-quarter earnings rose 16% on investment gains and lower claims costs.

Shares rose 3.6% premarket to $14.95 as per-share profit topped analysts’ average expectation by 1 cent.
Consumer efforts to cut costs are causing some pain at insurance companies, as motorists in desperate financial straits sometimes even drop coverage altogether – an illegal act in most states.

The company said last month it wants to land some more settled customers after years of short-term relationships. The company grew to third-place in the auto- insurer premium market share by serving customers other insurers shunned – those with a blemished driving record, inconsistent work or credit histories, or perhaps a history of driving uninsured.

To regain market share lost in the last year, Progressive needs to broaden its appeal, but fierce competition and the weak economy make that difficult.

The company posted income of $250.1 million, or 37 cents a share, up from $ 215.5 million, or 32 cents a share, a year earlier. Analysts surveyed by Thomson Reuters expected earnings of 36 cents.

Progressive, like insurers of many stripes, has reported securities losses in recent quarters amid the slumping stock market. It said it recognized $15.9 million in net realized gains, compared to a prior-year loss of $44.6 million.

Net premiums written edged up 0.5% to $3.53 billion while the combined ratio, a measure of the amount of premiums that were paid out in claims, slid to 92.6% from 93.6%.

Total auto policies in effect were up 3.6% from a year earlier to 7.4 million, while non-auto policies increased 4.3%.